VISHAL KANTILAL KANUNGA, KALYAN V. ITO WD 1(5), KALYAN

ITA 2795/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9692 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 19-04-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T A KHAN
• Assessee Lawyers: DR P DANIEL
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH F, MUMBAI BEFORE D.T. GARASIA, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NOS.90 & 91/M/2017 ASSESSMENT YEARS: 2010-11 & 2011-12 INCOME TAX OFFICER, WARD 1(5), 1 ST FLOOR, MOHAN PLAZA, WAYALE NAGAR, KHADAKPADA, KALYAN (WEST) KALYAN 421 301 VS. SHRI VISHAL KANTILAL KANUNGA, PROP. OF M/S. VISHAL CREATION, 844/B BHARAT COMPOUND, KALYAN ROAD, BHIWANDI 421 302 PAN: ANLPK 3760D (APPELLANT) (RESPONDENT) ITA NOS.2794 & 2795/M/2017 ASSESSMENT YEARS: 2010-11 & 2011-12 SHRI VISHAL KANTILAL KANUNGA, C/O. A.M. UNADKAT, 2/29 PREM KRUPA SOCIETY, OAK BAUG, KALYAN 421 301 PAN: ANLPK 3760D VS. INCOME TAX OFFICER, WARD 1(5), 1 ST FLOOR, MOHAN PLAZA, WAYALE NAGAR, KHADAKPADA, KALYAN (WEST) KALYAN (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : DR. P. DANIEL, A.R. REVENUE BY : SHRI T.A. KHAN, D.R. DATE OF HEARING : 05.09.2017 DATE OF PRONOUNCEMENT : 08.09.2017 O R D E R PER D.T. GARASIA , JUDICIAL MEMBER: THE ABOVE TITLED APPEALS TWO BY THE REVENUE AND TH E OTHER TWO BY THE ASSESSEE HAVE BEEN PREFERRED AGAINST THE ORD ER DATED 31.10.2016 OF THE COMMISSIONER OF INCOME TAX (APPEA LS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO VARIOUS ASSESSMENT YEARS. ITA NOS.90 & 91/M/2017 ITA NOS.2794 & 2795/M/2017 SHRI VISHAL KANTILAL KANUNGA 2 ITA NOS.90 & 91/M/2017 (REVENUES APPEALS) 2. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE YEARS UNDER CONSIDERATION THE ASSESSING OFFICER (HEREINAFTER RE FERRED TO AS THE AO) FOUND THAT ASSESSEE HAD MADE PURCHASES FROM FOL LOWING PARTIES, WHO HAVE BEEN DECLARED AS SUSPICIOUS. THE DETAILS O F THE BOGUS PURCHASES ARE AS UNDER: SR. NO. NAME OF THE DEALER AMOUNT OF BILL A.Y. 10-11 A.Y. 11-12 1. SAKAND INDUSTRIES 6,27,120 25,28,550 2. MAHAVIR INDUSTRIES 33,87,700 - 3. ARIHANT TRADERS - 70,60,000 4. SAMIR TRADING CORPORATION - 74,65,580 5. SURAJ SALES CORPORATION - 22,95,490 TOTAL RS.40,14,820 RS.1,93,49,620 3. THE ASSESSEE WAS ASKED TO PRODUCE THE ABOVE PART IES FOR VERIFICATION. THERE WAS NO COMPLIANCE OF NOTICE UND ER SECTION 133(6). THEREFORE, THE AO HAS MADE THE ADDITION ON ACCOUNT OF BOGUS PURCHASES OF RS.1,93,31,200/-. 4. MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CIT (A) HAS PARTLY ALLOWED THE CLAIM OF THE ASSESSEE. 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE P ARTIES. LD. D.R. RELIED UPON THE DECISION OF THE TRIBUNAL, AHME DABAD BENCH IN THE CASES OF SHWETAMBAR STEELS VS. ITO AHMEDABAD AN D GANESH RICE MILLS VS. CIT (294 ITR 316). THE FACTS IN THE PRESENT CASE SHOW THAT ASSESSEE COULD NOT PRODUCE THE PARTIES FR OM WHOM GOODS ITA NOS.90 & 91/M/2017 ITA NOS.2794 & 2795/M/2017 SHRI VISHAL KANTILAL KANUNGA 3 ARE STATED TO HAVE BEEN PURCHASED. THE SUPPLIERS WE RE FOUND TO BE ENGAGED IN PROVIDING BOGUS BILL WITHOUT ACTUAL DEAL ING OF GOODS. IN THIS REGARD, THE ASSESSEE HAS STATED THAT THEY HAD SUBMITTED QUANTITATIVE DETAILS OF STOCK WITH RESPECT OF THE S ALES WITH PURCHASES FROM THE PARTIES DURING THE ASSESSMENT PROCEEDINGS. THE ASSESSEE HAS SUBMITTED THE DETAIL OF CORRESPONDING SALES IN RESP ECT OF THE PURCHASE FROM THE SAID PARTIES. AS MENTIONED ABOVE THE AO HA S NEVER DISPUTED OR EXAMINED THE ASPECT OF SALES RECEIPTS. SINCE THE SALES MADE BY THE ASSESSEE WAS NOT DOUBTED OR DISPUTED BY THE AO AND HE HAS ACCEPTED THE SALES RECEIPTS OF THE ASSESSEE AS IT IS, THEREF ORE, THE AO CANNOT DENY THAT PURCHASES WERE NOT MADE BY THE ASSESSEE A ND THE MATERIAL WAS NOT USED FOR ITS SALES. WHAT IS UNDER DISPUTE I S THE PURCHASES FROM THE PARTIES FROM WHOM BILLS HAVE BEEN TAKEN AN D CHEQUES HAVE BEEN ISSUED TO THEM. PURCHASES ARE NOT IN DISPUTE B UT THE PARTIES FROM WHOM PURCHASE ARE SHOWN TO HAVE BEEN MADE ARE DISPU TED AND SUSPICIOUS. THE AO HAD MADE THE ADDITION AS SOME O F THE SUPPLIERS WERE DECLARED HAWALA DEALERS BY THE VAT DEPARTMENT. THIS MAY BE A GOOD REASON FOR MAKING FURTHER INVESTIGATION BUT THE AO DID NOT MAKE ANY FURTHER INVESTIGATION AND MERELY COMPLETED THE ASSESSMENT ON SUSPICION. ONCE THE ASSESSEE HAS BROUGHT ON RECO RD THE DETAILS OF PAYMENTS BY ACCOUNT PAYEE CHEQUE, IT WAS INCUMBENT ON THE AO TO HAVE VERIFIED THE PAYMENT DETAILS FROM THE BANK OF THE ASSESSEE AND ALSO FROM THE BANK OF THE SUPPLIERS TO VERIFY WHETH ER THERE WAS ANY IMMEDIATE CASH WITHDRAWAL FROM THEIR ACCOUNT. NO SU CH EXERCISE HAS BEEN DONE OR FINDINGS RECORDED, THERE WAS NO DETAIL ED INVESTIGATION ITA NOS.90 & 91/M/2017 ITA NOS.2794 & 2795/M/2017 SHRI VISHAL KANTILAL KANUNGA 4 MADE BY THE AO HIMSELF. IT IS ALSO FOUND THAT THE P AYMENTS HAVE BEEN MADE BY ACCOUNT PAYEE CHEQUE WHICH ARE DULY RE FLECTED IN THE BANK STATEMENT OF THE ASSESSEE. THERE IS NO EVIDENC E TO SHOW THAT THE ASSESSEE HAS RECEIVED CASH BACK FROM THE SUPPLIERS. MERELY BECAUSE THE SUPPLIERS DID NOT APPEAR BEFORE THE AO OR SOME CONFIRMATION LETTERS WERE NOT FURNISHED, ONE CANNOT CONCLUDE THA T THE PURCHASES WERE NOT MADE BY THE ASSESSEE. THIS VIEW IS SUPPORT ED BY THE DECISION OF NIKUNJ EXIMP ENTERPRISES VS. CIT 216 TA XMAN 171 (BOM). TO THIS EXTENT, WE ARE OF THE VIEW THAT IF T HE ASSESSEE HAS FULFILLED ITS ONUS OF MAKING THE PAYMENT BY CHEQUE AND HAS SUPPLIED THE ADDRESSES OF THE SELLERS THEN IT CANNOT BE PRES UMED THAT SUPPLIER WERE BOGUS SIMPLY BECAUSE THE SELLERS WERE NOT FOUN D AT THE GIVEN ADDRESS. THERE IS A CONSIDERABLE TIME GAP BETWEEN T HE PERIOD OF PURCHASE TRANSACTION AND PERIOD OF SCRUTINY PROCEED INGS. THE AO HAS NOT BROUGHT ANY MATERIAL ON RECORD TO SHOW THAT THE RE IS SUPPRESSION OF SALES. IT IS BASIC RULE OF ACCOUNTANCY AS WELL A S OF TAXATION LAWS THAT PROFIT FROM BUSINESS CANNOT BE ASCERTAINED WIT HOUT DEDUCTING COST OF PURCHASE FROM SALES. ESTIMATION OF PROFIT R ANGING FROM 12.5% TO 15% HAS BEEN UPHELD BY THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS SIMIT P SHETH 356 ITR 451 (GUJ.). R ESPECTFULLY FOLLOWING THE DECISION OF HONBLE GUJARAT HIGH COUR T IN THE CASE OF CIT VS. SIMIT P. SHETH 38 TAXMAN 385 (GUJ), WE DISM ISS BOTH THE APPEALS OF THE REVENUE. ITA NOS.90 & 91/M/2017 ITA NOS.2794 & 2795/M/2017 SHRI VISHAL KANTILAL KANUNGA 5 ITA NO.2794 & 2795/M/2017 (ASSESSEES APPEALS) 7. SINCE WE HAVE ALREADY DISMISSED THE APPEALS OF THE REVENUE AS ABOVE, ASSESSEES CROSS APPEALS DO NOT REQUIRE ANY ADJUDICATION. HENCE, THE SAME ARE DISMISSED. 8. IN THE RESULT, ALL THE APPEALS OF REVENUE AS WEL L AS OF ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08.09.2017. SD/- SD/- (RAJESH KUMAR) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 08.09.2017. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.